Tales from the Beat: Robert L. Crandall

When one thinks about the really big personalities of the airline industry for the past 25 years, Robert L. Crandall has to be right there at the top, along with Herb Kelleher and, for a decade, Gordon Bethune. It was my fortune to cover all three, Crandall and Kelleher more so than Bethune.

Bob Crandall was president of American Airlines for 15 years, from 1980 to 1995, and chief executive officer for 13 years, from 1985 to 1998.

I covered him for the last eight years of his time at American. It was not the best eight years for him or American, particularly from 1990 through 1993.

Consider that before I began covering aviation on Oct. 1, 1990, American under Crandall had:

Initiated the AAdvantage frequent-flier program, an industry-leading program that everyone else had to copy.

Created revenue management systems to extract the maximum from each ticket sold, an industry-leading program that everyone else had to copy.

Created the "B-scale," a lower pay scale for new pilots that helped fund more growth and a strategy that a number of airlines had to copy.

Embarked on the "growth plan," that saw American more than double in size between 1984 and 1990.

Bought California-based Air Cal to boost its West Coast performance and presence.

Piled up seven straight years of profits from 1983 through 1989 and was profitable through the first nine months of 1990. For that period from 1983 through Sept. 30, 1990: $2.4 billion in net income.

That’s quite a list of accomplishments. After I arrived, though:

The airline posted $1.5 billion in net losses from fourth quarter 1990 through 1993, worst in the airline's history to that point.

It closed its just-opened hubs in Nashville, San Jose and Raleigh-Durham.

Everyone else closed the gap or caught up on revenue management.

It abandoned the growth plan and over time was forced by its unions to do away with the B-Scale pay rates.

American's simplified system of fares called "Value Pricing" flopped terribly after their April 1992 introduction and helped worsen the industry losses that year.

Northwest Airlines and Continental Airlines sued American over Value Pricing and its aftermath. (American Airlines won the case.)

The carrier endured a five-day strike by flight attendants in 1993 and a 30-minute strike by pilots in 1997.

American and its Sabre unit had to abandon a reservations project, Confirm RS, with several car rental firms and hotel companies in 1992, enduring both embarrassment and losses that eventually exceeded $200 million related to the project and ensuring litigation.

So if Crandall wasn’t in a good mood many of the times I saw him, it was understandable. By the time that Crandall retired in 1998, the ship had been righted and American was five years into the most profitable period in its history from 1994 through 2000.

Crandall had to have been the most driven person I’ve covered. And he gladly admitted that he was driven. He summed up his approach to life as he talked to a group of travel executives at a Dallas conference in 2011.

“In times past, reporters sometimes would say to me, ‘Have you had a balanced life?’ I said, no. I haven’t had a balanced life, and I didn’t want a balanced life. I wanted a successful life. I had a wife who took care of the balance of life,” Crandall said.

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“I went to work early and I got home late and I worked most weekends. That’s what I wanted to do because I really wanted to be successful. And I was pretty brave, I said things that needed to be said and I got very, very angry if I ever lost.”

On weekends, he’d go to work and leave notes on other executives’ desks, along the lines of “I was here. Where were you?”

In his 1994 book

Hard Landing

, journalist Tom Petzinger called Crandall “the most feared and powerful man in the global airline industry. His very appearance intimidated people.”

Crandall embraced a concept of “competitive anger” in his management at AMR and American, an idea he explained in a 2000 deposition that was part of a U.S. Justice Department lawsuit against American:

“Our view was that it was very important for American to prevail and that as a consequence, in order to prevail in a very competitive industry, it was necessary to look at business as a contest,” he said in the deposition.

“If you’re going to have a contest and you’re going to prevail, you ought to be angry at your opponent, and you ought to be angry with yourself if you don’t win.”

When Northwest and Continental sued American in 1993, they introduced into evidence a 1991 AA memo about ailing Pan American World Airways, with a notation from Crandall in the margins: "Crush these guys."

Under Crandall’s direction, American created a hub at Dallas/Fort Worth Regional Airport in the early 1980s, stepping in just as Braniff Airways was weakening its hub operations in favor of more point-to-point flying.

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In May 1982, Braniff stopped flying as it ran low on cash. While Braniff supporters blamed American for Braniff’s demise, Crandall insisted that Braniff was doomed by its own poor management decisions.

“We didn't cheat or play dirty in any way,” Crandall growled in a 1998 interview. “We came down here and we flew our airplanes. Braniff destroyed itself. People who refuse to understand the facts, who refuse to study the facts, who do not know the facts are nevertheless entitled to mistaken opinions.”

In the low point of his career, Crandall suggested during a February 1982 telephone conversation with Braniff chief executive Howard Putnam that they should raise their fares by 20 percent. It was a low point because Putnam secretly taped the call and gave it to federal authorities.

U.S. prosecutors later accused of Crandall of violating federal antitrust laws. In a 1985 settlement, Crandall admitted no liability, but agreed not to discuss fares with competitors for five years unless American was setting up joint fares with another carrier.

Crandall understandably is touchy about that Putnam conversation. In 1991, I wrote a story about how Delta Air Lines was picking up market share at D/FW Airport at the expense of American. American had pulled down capacity there in early 1991 as some pilots staged a slowdown during prolonged contract talks.

At the insistence of an editor, I included a quote from the Putnam conversation in which Crandall told Putnam “we can both live here and there ain't no room for Delta.”

Not long later, the food chains at American and the Dallas Morning News was having one of its periodic dinners – I was the amoeba at the bottom of our food chain – when suddenly I heard Crandall roar from the other end of the table something along the lines of “How much longer am I going to have to read about the Putnam conversation?” (Expletives deleted.)

Well, I don’t know. Maybe forever. In any case, he wasn’t pleased.

A story involving Delta also prompted Crandall to issue an order in late April 1992 banning all American Airlines employees from talking to me.

I had gone to cover the Harvard Club of Dallas’ ceremonies honoring Herb Kelleher as its man of the year. Crandall, a close friend as well as fierce competitor, was to introduce Kelleher.

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The Harvard Club hosted Kelleher for a press conference prior to a reception and dinner. After the press conference, I called in to my office to say that Herb was very entertaining as usual but made no news. My editor said that Dallas Mayor Steve Bartlett that day had backed off his idea of amending the Wright amendment and that I should ask Crandall for comment. This would be easy, because Crandall would be pleased that Bartlett was withdrawing his proposal.

I found Crandall at the reception and got his attention. Before I could ask my question, he tore into me about two stories that had appeared in the previous Sunday’s newspaper.

Back then we had a column called Sunday Notebook in which we dropped items of interest that didn't justify a separate story.

One item I wrote the previous Sunday pointed out that Delta in 1992 had lost all the D/FW Airport market share that it had picked up at American’s expense in 1991.

A second item said that American was sending employees a $50 gift check for finishing first in an airline quality index. At the bottom of the item, I had noted that some AA pilots were donating their checks to a strike fund for American’s regional pilots in Puerto Rico.

Crandall said I seemed to regret Delta’s loss of market share. No explanation is necessary about what he didn’t like the second item. He turned his back to me to get another drink. When he turned around, he tore into me again. Then he abruptly turned to someone else at the reception and began a pleasant conversation.

I spent the next day observing cockpit resource management training at Southwest. When I got back to office late that afternoon, my editor said something along the lines of “We got problems.”

American’s corporate communications office had called during the day to say that Crandall had barred AA employees from talking to me ever again. Well, how about that?

As it so happened, that very evening, I got a tip from someone involved in the Confirm RS project – the one referenced earlier that eventually brought American more than $200 million in losses – that the project appeared to be collapsing, that people were moving out of their offices with their belongings in boxes.

So that’s the first story I had to work after getting the AA ban?

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After delicate diplomatic negotiations, I faxed my questions to the public relations people at American and they faxed AA's answers back to the business editor. I wrote the story from their faxed response.

This continued for about two weeks. Then we had another one of those food-chain dinners and it was as if the whole brouhaha had not happened.

Others inside AA later told me that Crandall thought his edict would force the Dallas Morning News to take me off the airline beat. Instead, it seems to have made me airline reporter for life.

I’ve since wondered if Crandall had gotten a briefing from Sabre chief Max Hopper about the enormous mess at Confirm, and then went straight from that bad news to the Kelleher event – and up I walked. (I asked him about that sequence of events many years later. He said he didn’t remember, that it was probably just us being macho. Believe me, I wasn’t/am not macho.)

Crandall had a reputation of being merciless with a subordinate who was not prepared or tried to bluff his or her way through a presentation. He expected others to work as hard as him and to care about his airline and about winning as much as he did.

He also had a reputation for being fiercely loyal to those who met his standards, and compassionate when compassion was called for.

He also had a sense of humor.

In the early 1990s, I sat in on a “president’s conference” at a University of Texas-Arlington theater. Each year, Crandall would lead a series of meetings with employees in which he and his team would give a state-of-the-airline/industry presentation and then answer questions.

At this particular conference, he told a story about a man who slipped off a cliff and barely grabbed onto a bush on the side of the cliff to keep him from falling to his death. “Help, help!” the man yelled. “Is there anyone up there?” Suddenly a light shone out of the clouds, and a voice boomed: “It is the Lord, thy God. Release the bush, and I will lift you up!”

The man looked down far below to the ground, then looked back up. “Is there anyone else up there?’ he yelled.

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Good joke, but the point was that there was nobody else up there, that American could not rely on others to save it.

Later, during the Q&A, an employee noted that union employees had won a third week of vacation after 10 years’ service, and he wanted non-union employees to get the same. In a lengthy answer, Crandall acknowledged the desire for more vacation, but said no, those employees would still get only two weeks’ vacation.

The employee thought about it, and then said: “Is there anyone else up there?”

Crandall laughed as heartily as everyone else.

In March 2015, Crandall spoke to the Wings Club, an aviation-focused group that attracts the big names in airlines and aircraft. He was asked his biggest mistakes and his biggest triumphs.

“In terms of worst decision, probably we weren’t smart enough to realize that Nashville and Raleigh Durham weren’t going to work. We got smarter as time passed,” Crandall said.

“The best decision I think was when in the early 1980s we persuaded the union that allowing us to grow a new airline within the American Airlines framework on a two-tier basis, it allowed us to triple the size of the airline. It allowed us to create a very successful commercial enterprise. And it allowed us to provide jobs to 65,000 people that didn’t have one when we started. So I think that was pretty good.”

Crandall stepped down as chairman and CEO of American and AMR in May 1998, and he and wife Jan flew to England to pick up a boat, "Arway," they had commissioned. They then sailed it back to the United States.

I saw him that September at a Dallas event where he was speaking and told him some pilots had already said they wished Crandall was still running the airline. Crandall, who butted heads frequently with the unions, just laughed.

When he stepped down from American, he stepped down completely. He didn’t stay on the AMR board and has largely refrained from commenting publicly about American’s path in the years. He may have been calling up AA executives every day to tell them what they should do. But if he did, it never became public.

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I’ve seen him a few times since and we have a cordial relationship. Most recently, I visited with him and Jan on Dec. 9, 2013, the day that American and US Airways merged to form American Airlines Group. I told him that it seemed he was sending a message to the troops by showing up at AA HQs to applaud the merger.

“That was the idea. The idea they had and the idea I had by agreeing to come was that I think these guys are saying the right things,” Crandall said. “Now, if they do what they say they’ll do, then I think this will work very well.”

At ceremonies marking the merger, Crandall expressed regret that he wouldn’t be able to help out in the merger. I asked him later about whether he really would have liked to go through all that work again.

Yes indeed, said Crandall, who had turned 78 only two days before.

“It would be great fun to do it again. I had a wonderful time doing it. It would be great fun to do it again. But I said to Jan this morning, even if they asked me to come back and run it, I’m not physically able any more to work 18-hour days, and that’s what it takes. You’ve got to get up at 5:30 in the morning and you’ve got to be able to stay up until 11 o’clock at night, and I can’t do that anymore.”